3 Problem: 10 Start with the partial model in the file Ch12 P10 Build a Model.xlsx on the textbook's Website, which contains the 2019 financial statements of Zieber Corporation. Forecast Zeiber's 2020 Income statement and balance sheets. Use the following 8 assumptions: (1) Sales grow by 6%. (2) The ratio of expenses to sales, depreciation to fixed assets, cash to sales, accounts 10 receivable to sales, and inventories to sales will be the same in 2020 as in 2019 (3) Zeiber will not issue any new stock or new long-term bonds. (4) The Interest rate is 11% for long-term debt and the interest expense on long-term debt is based on the 11 average balance during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate (7) The tax rate is 12 25%. Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of 13 14 credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there 15 will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend. 16 17 Key Input Data: Used in the 18 forecast 19 Tax rate 25% 20 Dividend growth rate 8% 21 Rate on notes payable-term debt, 9% 22 Rate on long-term debt, 11% 23 Rate on line of credit, nuoc 12% 24 25 26 . What are the forecasted levels of the line of credit and special dividends ? (Hints: Create a column showing the ratios for the 27 current year, then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that 28 doesn't include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast 29 and then add a new column that shows the final forecast that includes any new line of credit or special dividend.) 30 31 Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column 32 G 33 34 Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special 35 dividend in the preliminary forecast 36 37 38 After completing the preliminary forecast of the balance sheets and income statement, go to the area below the preliminary 39 forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the amount of any new line of 40 credit OR special dividend you should not have a new line of credit AND a special dividend, only one or the other) 41 42 After specifying the amounts of the special dividend or line of credit, create a second column) for the final forecast next to 43 the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the special dividend or line of 44 credit 45 Build a Model 15 tv Formatti 1 fx Build a Model Problem D G 2020 Preliminary forecast doesn't Include special dividend or LOC 2020 Final forecast (includes special dividend of LOC 2010 Historical 2020 Input 2010 ratios Forecasting basis rasos $455,150 Growth $386,878 % of sales $14,565 % of fixed assets $53,708 $11,880 Interest rate x average debt during year $0 $41,828 $10.457 $25,097 $12,554 Growth Zero in preliminary forecast 512,543 47 Income Statements: 48 (December 31, in thousands of dollars) 49 50 51 Sales 52 Expenses (excluding depe & amort) 53 Depreciation and Amortization 54 EBIT 55 Interest expense on long-term debt 56 Interest expense on line of credit 57 EBT 58 Taxes (25%) 59 Net Income GO 61 Common dividende regular dividends) 62 Special dividends 63 Addition to retained earnings 64 65 Balance Sheets 66 (December 31, in thousands of dollars) 67 68 69 Assets 70 Cash 71 Accounts Receivable 72 Inventories 73 Total current assets 74 Fixed assets 75 Total assets 76 77 Liabilities and equity 78 Accounts payable 79 Accruals 80 Line of credit 81 Total current liabilities 82 Long-term debt 83 Total liabilities 34 Common stock 8S Retained Earnings 86 Total common equity 87 Total liabilities and equit 88 2019 Historical ratios 2020 Preliminary forecast doesn't include special dividend or LOC 2020 Final forecast includes special dividend or LOC 2020 Input radios 2019 Forecasting basis $18,206 $100,133 $45.515 $163,854 $364,120 $527 974 % of sales % of sales % of sales % of sales % of sales % of sales Zero in preliminary forecast $31,861 $27,309 $0 $59,170 $120,000 $179,170 $60,000 $100,745 5166 745 Previous Previous Previous - Addition to retained earnings Build a Model otv Tell lile BX H Arial 12 Wrap Text General Paste B IU Merge & Center $. % ) Condition Formattie A1 fx Build a Model Problem B D E G 88 89 Identity Financing Deficit or Surplus 90 91 Increase in spontaneous liabilities (accounts payable and accruals) 92 + Increase in long-term bonds, preferred stock and common stock 93 Net Income in preliminary forecast) minus regular common dividends 94 Increase in financing 95 96 - Increase in total assets 97 Amount of financing deficit or surplus: 98 99 I deficit in financing (negative show the amount for the line of credit 100 surplus in financing positive show the amount of the special dividend 101 102. What are the forecasted levels of the line of credit and special dividends? 103 104 Required ine of credit 105 Special dividends Note: we copied values from H09:H100) when sales growth in G51 - % 106 107 b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51) What are the forecasted 108 levels of line of credit and special dividends? 109 110 Required ine of credit Note: we copied values from H9 H100) when sales growth in G51 = 3% 111 Special dividends 112 113 114 115 116 117 118 119 120 121 122 123 124 125 125 127 128 129 130 G H 18 Start with the partial model in the file Ch12 P10 Bulld a Model.xlsx on the textbook's Web site, which contains the 2019 financial statements of Zieber Corporation. Forecast Zeiber's 2020 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts 9 receivable to sales, and inventories to sales will be the same in 2020 as in 2019. (3) Zelber will not issue any new stock or 10 new long-term bonds. (4) The interest rate is 11% for long-term debt and the interest expense on long-term debt is based on the 11 average balance during the year. (5) No interest is eamed on cash. (6) Regular dividends grow at an 8% rate. () The tax rate is 12 13 25%. Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there 14 15 will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend. 16 17 Key Input Data: Used in the forecast 19 Tax rate 25% 20 Dividend growth rate 8% 21 Rate on notes payable-term debt rate 9% 22 Rate on long-term debt, 11% 23 Rate on line of credit, TLOG 12% 24 25 26 a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios for the 27 current year, then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that 28 doesn't include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast 29 and then add a new column that shows the final forecast that includes any new line of credit or special dividend.) 30 31 Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column 32 G. 33 34 Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special 35 dividend in the preliminary forecast. 36 37 38 After completing the preliminary forecast of the balance sheets and income statement go to the area below the preliminary 39 forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the amount of any new line of 40 credit OR special dividend you should not have a new line of credit AND a special dividend, only one or the other) 42 After specifying the amounts of the special dividend or line of credit, create a second column (1) for the final forecast next to 43 the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the special dividend or line of 44 credit. 45 46 Build a Model + Lb General Paste BIU E Merge & Center $ % Conditional Fe Formatting as A1 fx Build a Model Problem D E K 2019 Historical ratios 2020 Input ratios 2020 Preliminary forecast doesn't include special dividend or LOC 2020 Final forecast Includes special dividend or LOC Forecasting basis Growth % of sales % of fixed assets 47 Income Statements: 48 (December 31, in thousands of dollars) 49 50 51 Sales 52 Expenses (excluding depr. & amort) 53 Depreciation and Amortization 54 EBIT 55 Interest expense on long-term debt 56 Interest expense on line of credit 57 EBT 58 Taxes (25%) 59 Net Income 60 61 Common dividends (regular dividends) 62 Special dividends 63 Addition to retained earnings 64 65 Balance Sheets 66 (December 31, in thousands of dollars) 2019 $455,150 $386,878 $14,565 $53,708 $11,880 $0 $41,828 $10,457 $25,097 Interest rate x average debt during year $12.554 Growth Zero in preliminary forecast $12.543 2019 Historical ratios 2020 Preliminary forecast doesn't include special dividend or LOC 2020 Final forecast includes special dividend or LOC 2020 Input ration 2019 Forecasting basis % of sales % of sales % of sales $18,206 $100,133 $45,515 S163,854 $364.120 5527-974 % of sales 68 69 Assets: 70 Cash 71 Accounts Receivable 72 Inventories 73 Total current assets 74 Fixed assets 75 Total assets 76 77 Liabities and equity 78 Accounts payable 79 Accruals 80 Line of credit 81 Total current liabilities 82 Long-term debt 83 Total liabilities 84 Common stock 85 Retained Earnings 86 Total common equity 87 Total liabilities and equity 88 RS Identitaandian Diorums % of sales % of sales Zero in preliminary forecast $31,861 $27,309 $0 $59,170 $120,000 $179,170 $60,000 $106 745 $166,745 Previous Previous Previous - Addition to retained earnings TT Build a Model + = OD |||| lili Arial ~ 12 A ab Wrap Text General Paste BIU Merge & Center $ % ) Conditio Formatt A1 fx Build a Model Problem D E G H 88 89 Identify Financing Deficit or Surplus 90 91 Increase in spontaneous liabilities (accounts payable and accruals) 92 + Increase in long-term bonds, preferred stock and common stock 93 - Net Income (in preliminary forecast) minus regular common dividends Increase in financing 95 96 - Increase in total assets 97 Amount of financing deficit or surplus: 98 99 If deficit in financing (negative), show the amount for the line of credit 100 of surplus in financing positive), show the amount of the special dividend 101 102. What are the forecasted levels of the line of credit and special dividonda ? 103 104 Required Ine of credit Note: We copled values from H99:H100) when sales growth in G51 = 6% 105 Special dividends 106 107 b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51). What are the forecasted 108 levels of line of credit and special dividends? 109 110 Required ine of credit Note: we copied values from H99:H100) when sales growth in G51 - 3% 111 Special dividends 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 3 Problem: 10 Start with the partial model in the file Ch12 P10 Build a Model.xlsx on the textbook's Website, which contains the 2019 financial statements of Zieber Corporation. Forecast Zeiber's 2020 Income statement and balance sheets. Use the following 8 assumptions: (1) Sales grow by 6%. (2) The ratio of expenses to sales, depreciation to fixed assets, cash to sales, accounts 10 receivable to sales, and inventories to sales will be the same in 2020 as in 2019 (3) Zeiber will not issue any new stock or new long-term bonds. (4) The Interest rate is 11% for long-term debt and the interest expense on long-term debt is based on the 11 average balance during the year. (5) No interest is earned on cash. (6) Regular dividends grow at an 8% rate (7) The tax rate is 12 25%. Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of 13 14 credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there 15 will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend. 16 17 Key Input Data: Used in the 18 forecast 19 Tax rate 25% 20 Dividend growth rate 8% 21 Rate on notes payable-term debt, 9% 22 Rate on long-term debt, 11% 23 Rate on line of credit, nuoc 12% 24 25 26 . What are the forecasted levels of the line of credit and special dividends ? (Hints: Create a column showing the ratios for the 27 current year, then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that 28 doesn't include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast 29 and then add a new column that shows the final forecast that includes any new line of credit or special dividend.) 30 31 Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column 32 G 33 34 Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special 35 dividend in the preliminary forecast 36 37 38 After completing the preliminary forecast of the balance sheets and income statement, go to the area below the preliminary 39 forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the amount of any new line of 40 credit OR special dividend you should not have a new line of credit AND a special dividend, only one or the other) 41 42 After specifying the amounts of the special dividend or line of credit, create a second column) for the final forecast next to 43 the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the special dividend or line of 44 credit 45 Build a Model 15 tv Formatti 1 fx Build a Model Problem D G 2020 Preliminary forecast doesn't Include special dividend or LOC 2020 Final forecast (includes special dividend of LOC 2010 Historical 2020 Input 2010 ratios Forecasting basis rasos $455,150 Growth $386,878 % of sales $14,565 % of fixed assets $53,708 $11,880 Interest rate x average debt during year $0 $41,828 $10.457 $25,097 $12,554 Growth Zero in preliminary forecast 512,543 47 Income Statements: 48 (December 31, in thousands of dollars) 49 50 51 Sales 52 Expenses (excluding depe & amort) 53 Depreciation and Amortization 54 EBIT 55 Interest expense on long-term debt 56 Interest expense on line of credit 57 EBT 58 Taxes (25%) 59 Net Income GO 61 Common dividende regular dividends) 62 Special dividends 63 Addition to retained earnings 64 65 Balance Sheets 66 (December 31, in thousands of dollars) 67 68 69 Assets 70 Cash 71 Accounts Receivable 72 Inventories 73 Total current assets 74 Fixed assets 75 Total assets 76 77 Liabilities and equity 78 Accounts payable 79 Accruals 80 Line of credit 81 Total current liabilities 82 Long-term debt 83 Total liabilities 34 Common stock 8S Retained Earnings 86 Total common equity 87 Total liabilities and equit 88 2019 Historical ratios 2020 Preliminary forecast doesn't include special dividend or LOC 2020 Final forecast includes special dividend or LOC 2020 Input radios 2019 Forecasting basis $18,206 $100,133 $45.515 $163,854 $364,120 $527 974 % of sales % of sales % of sales % of sales % of sales % of sales Zero in preliminary forecast $31,861 $27,309 $0 $59,170 $120,000 $179,170 $60,000 $100,745 5166 745 Previous Previous Previous - Addition to retained earnings Build a Model otv Tell lile BX H Arial 12 Wrap Text General Paste B IU Merge & Center $. % ) Condition Formattie A1 fx Build a Model Problem B D E G 88 89 Identity Financing Deficit or Surplus 90 91 Increase in spontaneous liabilities (accounts payable and accruals) 92 + Increase in long-term bonds, preferred stock and common stock 93 Net Income in preliminary forecast) minus regular common dividends 94 Increase in financing 95 96 - Increase in total assets 97 Amount of financing deficit or surplus: 98 99 I deficit in financing (negative show the amount for the line of credit 100 surplus in financing positive show the amount of the special dividend 101 102. What are the forecasted levels of the line of credit and special dividends? 103 104 Required ine of credit 105 Special dividends Note: we copied values from H09:H100) when sales growth in G51 - % 106 107 b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51) What are the forecasted 108 levels of line of credit and special dividends? 109 110 Required ine of credit Note: we copied values from H9 H100) when sales growth in G51 = 3% 111 Special dividends 112 113 114 115 116 117 118 119 120 121 122 123 124 125 125 127 128 129 130 G H 18 Start with the partial model in the file Ch12 P10 Bulld a Model.xlsx on the textbook's Web site, which contains the 2019 financial statements of Zieber Corporation. Forecast Zeiber's 2020 income statement and balance sheets. Use the following assumptions: (1) Sales grow by 6%. (2) The ratios of expenses to sales, depreciation to fixed assets, cash to sales, accounts 9 receivable to sales, and inventories to sales will be the same in 2020 as in 2019. (3) Zelber will not issue any new stock or 10 new long-term bonds. (4) The interest rate is 11% for long-term debt and the interest expense on long-term debt is based on the 11 average balance during the year. (5) No interest is eamed on cash. (6) Regular dividends grow at an 8% rate. () The tax rate is 12 13 25%. Calculate the additional funds needed (AFN). If new financing is required, assume it will be raised by drawing on a line of credit with an interest rate of 12%. Assume that any draw on the line of credit will be made on the last day of the year, so there 14 15 will be no additional interest expense for the new line of credit. If surplus funds are available, pay a special dividend. 16 17 Key Input Data: Used in the forecast 19 Tax rate 25% 20 Dividend growth rate 8% 21 Rate on notes payable-term debt rate 9% 22 Rate on long-term debt, 11% 23 Rate on line of credit, TLOG 12% 24 25 26 a. What are the forecasted levels of the line of credit and special dividends? (Hints: Create a column showing the ratios for the 27 current year, then create a new column showing the ratios used in the forecast. Also, create a preliminary forecast that 28 doesn't include any new line of credit or special dividends. Identify the financing deficit or surplus in this preliminary forecast 29 and then add a new column that shows the final forecast that includes any new line of credit or special dividend.) 30 31 Begin by calculating the appropriate historical ratios in Column E. Then put these ratios and any other input ratios in Column 32 G. 33 34 Forecast the preliminary balance sheets and income statements in Column H. Don't include any line of credit or special 35 dividend in the preliminary forecast. 36 37 38 After completing the preliminary forecast of the balance sheets and income statement go to the area below the preliminary 39 forecast and identify the financing deficit or surplus. Then use Excel's IF statements to specify the amount of any new line of 40 credit OR special dividend you should not have a new line of credit AND a special dividend, only one or the other) 42 After specifying the amounts of the special dividend or line of credit, create a second column (1) for the final forecast next to 43 the column for the preliminary forecast (H). In this final forecast, be sure to include the effect of the special dividend or line of 44 credit. 45 46 Build a Model + Lb General Paste BIU E Merge & Center $ % Conditional Fe Formatting as A1 fx Build a Model Problem D E K 2019 Historical ratios 2020 Input ratios 2020 Preliminary forecast doesn't include special dividend or LOC 2020 Final forecast Includes special dividend or LOC Forecasting basis Growth % of sales % of fixed assets 47 Income Statements: 48 (December 31, in thousands of dollars) 49 50 51 Sales 52 Expenses (excluding depr. & amort) 53 Depreciation and Amortization 54 EBIT 55 Interest expense on long-term debt 56 Interest expense on line of credit 57 EBT 58 Taxes (25%) 59 Net Income 60 61 Common dividends (regular dividends) 62 Special dividends 63 Addition to retained earnings 64 65 Balance Sheets 66 (December 31, in thousands of dollars) 2019 $455,150 $386,878 $14,565 $53,708 $11,880 $0 $41,828 $10,457 $25,097 Interest rate x average debt during year $12.554 Growth Zero in preliminary forecast $12.543 2019 Historical ratios 2020 Preliminary forecast doesn't include special dividend or LOC 2020 Final forecast includes special dividend or LOC 2020 Input ration 2019 Forecasting basis % of sales % of sales % of sales $18,206 $100,133 $45,515 S163,854 $364.120 5527-974 % of sales 68 69 Assets: 70 Cash 71 Accounts Receivable 72 Inventories 73 Total current assets 74 Fixed assets 75 Total assets 76 77 Liabities and equity 78 Accounts payable 79 Accruals 80 Line of credit 81 Total current liabilities 82 Long-term debt 83 Total liabilities 84 Common stock 85 Retained Earnings 86 Total common equity 87 Total liabilities and equity 88 RS Identitaandian Diorums % of sales % of sales Zero in preliminary forecast $31,861 $27,309 $0 $59,170 $120,000 $179,170 $60,000 $106 745 $166,745 Previous Previous Previous - Addition to retained earnings TT Build a Model + = OD |||| lili Arial ~ 12 A ab Wrap Text General Paste BIU Merge & Center $ % ) Conditio Formatt A1 fx Build a Model Problem D E G H 88 89 Identify Financing Deficit or Surplus 90 91 Increase in spontaneous liabilities (accounts payable and accruals) 92 + Increase in long-term bonds, preferred stock and common stock 93 - Net Income (in preliminary forecast) minus regular common dividends Increase in financing 95 96 - Increase in total assets 97 Amount of financing deficit or surplus: 98 99 If deficit in financing (negative), show the amount for the line of credit 100 of surplus in financing positive), show the amount of the special dividend 101 102. What are the forecasted levels of the line of credit and special dividonda ? 103 104 Required Ine of credit Note: We copled values from H99:H100) when sales growth in G51 = 6% 105 Special dividends 106 107 b. Now assume that the growth in sales is only 3% (do this by changing the growth rate in Cell G51). What are the forecasted 108 levels of line of credit and special dividends? 109 110 Required ine of credit Note: we copied values from H99:H100) when sales growth in G51 - 3% 111 Special dividends 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129